Whether Provident Fund Act & ESI Act continue to be applicable if number of employees falls below requisite number required for applicability

Section 1(5) of the Provident Fund Act has specific provision regarding number of persons falling below 20. The provision reads as under-

“An establishment to which this Act applies shall continue to be governed by this Act notwithstanding that the number of persons employed therein at any time falls below twenty.”

In view of the said provision even number of persons employed in establishment falls below 20 the Act continues to be applicable.

The High Court’s also have held that the Act continues to apply even if strength falls below the requisite number. In Sunil Kumar V/s Rajendran Pillai & Ors, 2007 it was laid down by the Kerala High Court that once an establishment is covered under the Provident Fund Act, there cannot be cessation of coverage and more over the Provident Fund Act being a social security legislation there cannot be any relinquishment of right by beneficiary and it is totally void as being opposed to public policy.